Lesson #3: Cutting Your Losers & Letting Your Winners Run
As investors do when trading stocks in real life, fantasy hockey team owners form attachments to their players. It could be a hometown favourite, it could be a source of national pride or it could just be an ego’s unwillingness to admit that a wrong decision was made. Whatever the reason, when it comes to running a team like an investor would, these feelings can end up clouding rational decisions and ultimately drag down the performance of the team and portfolio.
One of the most often cited pieces of investing wisdom is to cut your losers early and let your winners run. If your portfolio’s former high flyer isn’t performing the way you’d hoped or worse, it they’re injured and out of the game, letting them go allows for a better producing asset to take their place. Conversely, if you’ve got a player on a hot streak, benching them while they’re at their most productive is a sure fire way to land your portfolio in the penalty box. Either way, you want the performers in your portfolio and the disappointments out.
The Bottom Line
Successfully running a fantasy hockey team (or any fantasy sports team) for a season can teach you to treat a team like a business and to manage players like assets. Whether in the fantasy sports world or the real world, treating your team as a portfolio of investments hopefully encourages rational decisions to prevail over emotional ones. Ultimately, if running a fantasy hockey team can impart some foundational lessons about investing, maximize the return on time spent watching hockey and do so in a fun way, then that’s a learning hat trick pros and amateurs alike can cheer for.
Do you have an investing lesson or two that you’ve gleaned from running a fantasy hockey team? If so we’d love to hear about it in the comments section below.